Don’t be an April fool in 2018 – Make sure your property is still lettable.

Thursday 25th January 2018

Are you prepared for changes to EPC regulations? David Straughan, associate director in our Building Consultancy team, outlines the changes and what steps need to be taken to comply.

For the past 15 years there has been growing pressure for the energy performance and efficiency of the nation’s buildings to be improved.

Whilst far-reaching requirements have been imposed for new developments, only now are we starting to see measures come into effect which are targeted to the UK’s existing property stock.

What are the changes? Last year the Government released guidance on the new Minimum Energy Efficiency Standards (MEES), which will make it unlawful from April this year to let both commercial and domestic buildings in England and Wales which do not achieve a minimum Energy Performance Certificate (EPC) rating of ‘E’.

Failure to comply with the MEES within the non-domestic market will result in penalties, which are largely based on the property’s rateable value, and with a maximum fine for non-compliance of £160,000 per asset.

The MEES regulations will only apply to commercial properties where a lease is agreed from 1st April 2018, but it is worth noting that it will also include all lease renewals beyond this date. At the moment the regulations will not apply to very short lettings, or to lettings of 99 years or more.

So from April, in order to complete a new lease, a landlord will need to ensure that a property complies with MEES by providing the tenant with a valid Energy Performance Certificate (EPC).

Are there any exemptions to the rules? Generally, all properties will be required to meet the minimum ‘E’ rating, however, exemptions may be given to landlords where they can prove that, despite not achieving an ‘E’ rating, they have implemented all cost effective improvement measures to do so.

Exemptions may also be granted to Landlords if consent to undertake the improvement works is refused from a third party such as a Local Authority or a tenant in-place, or if the implementation of the measures would result in a devaluation of 5% or more.

There are a number of instances where buildings are exempt from requiring an EPC so for those buildings, the MEES regulations will not apply.

So, what do you do now? As a commercial property specialist, Naylors is well placed to help property owners and occupiers make sure they are prepared for the new MEES regulations. We have the necessary skills and experience in Building Surveying, Property Management and Facilities Management to ensure that our client’s assets are prepared and can continue to be let for the best possible return.

The first step is to make sure that an EPC is in place for every property within a portfolio. We can then appraise each property and provide a report, ranking the buildings and units by their EPC and undertake any necessary works to improve the assessment from its current rating to an agreed target rating.

Improvements can range from simply upgrading existing light fittings to LED fittings, or in some cases undertaking a full overhaul of the fabric of a building.

In order to safeguard a building for the future, we would recommend that targets should always achieve a ‘D’ rating with options and costs provided to improve to a ‘C’ rating in order to futureproof the assessment.

Without a fully considered holistic approach, property owners could see themselves detrimentally affected by falling values and void periods, so when it comes to MEES it is definitely best to ‘be prepared’.

Your Commercial Property People for the North East. Established for over 25 years, we are a highly regarded firm of Chartered Surveyors and Commercial Property Consultants based in Newcastle upon Tyne.